Depreciation Calculation Quiz

A computer system is bought for £4,000 and is subject to a 30% annual depreciation rate using the reducing balance method. What will be its value after 3 years?

• £1,960

• £2,002

• £1,886

• £1,372

Answer explanation

4000 x 0.7^3= 1372

A business equipment costing £12,000 depreciates at a rate of 10% per year using the reducing balance method. What is the book value after 4 years?

• £7,290.24

• £8,215.68

• £7,873.20

• £8,756.32

Answer explanation

12000 x 0.9^4

An office furniture set costing £10,000 depreciates at 15% per year on a reducing balance basis. What is the depreciation expense in the third year?

• £1,083.75

• £1,215.50

• £1,350.75

• £1,072.25

Answer explanation

Value after 2 years: 10000 x 0.85^2= 7225

Depreciation in year 3: 7225 x 0.15=1083.75

A company buys a £40,000 equipment with a reducing balance depreciation rate of 25%. What is the depreciation value in the 2nd year?

• £30000

• £7500

• £22500

• £15000

Answer explanation

Value after 1st year: 40000x 0.75= 30,000

Depreciation in 2nd year: 30000 x 0.25= 7500

If a piece of machinery is purchased for £22,000 and depreciates at 15% per year. It has a life of 3 years. What is the total amount of depreciation?

• £8489.25

• £16,415.25

• £14,877.75

• £13,520.65

Answer explanation

Value after 3 years: 22000 x 0.85^3= 13510.75

22000 - 13510.75= 8489.25